Steven Lewis

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In THe Matter oF STEVEN LEWIS, vorna sustness as THE STEVEN LEWIS : COMPANY, ET AL. | CONSENT ORDER, ETC., IN REGARD. TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT | Docket C-2286. Complaint, Sept. 19, 1972—Decision, Sept. 19, 1972. Consent order requiring two former Hollywood, California, franchisors of distributorships for cologne and other products and their successor firm, among other things to cease representing the past earnings of distributors or franchisees unless past earnings represent a substantial number of distributors or franchisees; misrepresenting the amount of time.and effort respondents will spend to obtain accounts for their distributors or franchisees; misrepresenting the prior experience or necessary training required by distributors or franchisees; misrepresenting the .prior experience or necessary training. required by distributors or franchisees in order to operate successfully; and misrepresenting the nature, character, performance or efficacy of any product. Respondents are further required to furnish.all prospective franchisees with a written statement giving, among other things, rights and obligations of all parties, complete financial details of the agreement, and a list of previous purchasers. Also, franchisees must be allowed five days in which to cancel the contract for any reason with a refund of all monies by respondent. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Steven Lewis, an individual formerly trading and doing business as the Steven Lewis Company, a sole proprietorship; Twenty First Century Industries, Inc., a corporation; and Steven Lewis, individually and as an officer of said corporation, herein referred to as respondents, have violated the provisions of said Act, and it appearing to the Commision that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

ParacrapH 1. Respondent Steven Lewis is an individual formerly trading and doing business as The Steven Lewis Company with its principal office and place of business formerly located at 6565 Sunset Boulevard, Hollywood, California.

Respondent Twenty First Century Industries, Inc., is a corporation organized, existing and formerly doing business under and by virtue of the laws of the State of California, with its principal office and STEVEN LEWIS CO., ET AL. 371 3870 : Complaint place of business formerly located at 6565 Sunset Boulevard, Hollywood, California. Respondent Twenty First Century Industries, Inc., was the successor in interest to the business of the Steven Lewis Company having purchased all of the assets of said company on or about March 31, 1969.

‘Respondent Steven Lewis is president and majority stockholder of the corporate respondent. He formulated, directed and controlled the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. His present address is 205 Third “Avenue, New York, New York.

Par. 2. Prior to the corporate respondents’ purchase of the assets of the Steven Lewis Company, the respondent Steven Lewis, trading and doing business as the Steven Lewis Company had been engaged i in the advertising, offering for sale, sale and distribution of men’s cologne and greeting cards ‘and 3 in the advertising, offering for sale, and sale of distributorships or franchises for said products to members of the — public.

Respondent Twenty First Century Industries, Inc., was, and for some time in the past had been, engaged in the offering for sale, sale and distribution of men’s cologne, Ronson products and Life Breathers and in the advertising, offering for sale, and sale of distributorships or franchises for said products to members of the public. Par. 3. In the course and conduct of their business respondents caused, and for some time last past have caused, their said products, when sold, to be shipped from their place of business in the State of California and their suppliers’ places of business in the State of California, and other states, to purchasers thereof located in various other States of the United States. In addition, in the course and conduct of their business, respondents have disseminated and caused to be disseminated in newspapers of interstate circulation, advertisements designed to be read by persons residing outside the State of California and intended to induce such persons to enter into contractual agreements with respondents to purchase distributorships or franchises and products from respondents. Respondents also introduced into interstate circulation, through the instrumentality of the United States mails, promotional material, circulars, business papers and contracts with the resultant effect that members of the public residing outside the State of California did in fact purchase respondents’ distributorships or franchises and products utilizing the instrumentality of the United States mails to consummate said contractual agreements and purchases, thereby placing respondents in business in commerce within the intent and meaning of Section 5 of the Federal Trade Commis- Complaint 81 E.T.C:

sion Act.. Respondents have maintained, and at all times mentioned herein maintained, a substantial course of trade in products, distributorships or franchises, in commerce, as “commerce” is defined in the Federal Trade Commission Act.

Par. 4. In the course and conduct. of their business as aforesaid and for the purpose of inducing the purchase of their distributorships or franchises and products, respondents have made numerous statements and representations in promotional material and in newspaper advertisements.

Typical and illustrative of the newspaper advertisements used by respondents, but not all inclusive thereof, is the following: Distributor wanted. Income potential $15,000 possible. Part or full time. Join a manufacturer of nationally advertised name brand men’s products, which are to be sold through established retail stores in your area. You will be trained and guided to take care of all reorders, deliveries, and collect high cash profits. An investment of $2,940 can put you into this booming money making industry. No experience required, can be handled from home, spare time, and built into a full time lucrative business of your own with a $15,000-$20, 000 potential a out sacrificing present income.

Immediate Cash Income! Spare time—No selling. We seek reliable persons of good standing to own a business of their own and spend 6-8 hours a week collecting cash and refilling merchandise from company established accounts in their own area. , The appointed person will receive intensive field training and aid from a company executive.

Join a nationally advertised manufacturer of name brand toiletries. This is one of the nations leading growth industries, and you will service and collect high cash profits from leading stores in your community turned over to you by the company. _ Restore the breath of life with the Life Breather. Every year, thousands of men, women and children die due to asphyxiation. Drowning, heart attack, electrical shock, smoke and poison gas inhalation are the major causes. These fatalities might have been prevented by use of General Medical Devices’ dramatic new resuscitator, the Life Breather. The Life Breather quickly clears the victim’s air passages and géts him breathing free and easv.

Par. 5. By and through the use of the aforesaid statements and representations, and others of similar import and meaning not expressly set out herein, respondents have represented directly or by implication :

A. That persons who purchase a distributorship or franchise from respondents can. earn $15,000 to $20,000 a year in their spare time or full time.

B. That said earnings projections are the earnings made by a significant number of persons who have purchased and operated respondents’ distributorships or franchises.

STEVEN LEWIS CO., ET. AL: 373 870 Complaint C. That respondents will secure profitable customers for purchasers of respondents’ distributorships or franchises. D. That prior business experience is neither required nor necessary to operate and maintain the distributorship or franchise successfully. E. That purchasers of respondents’ distributorships or franchises will not be required to sell products or engage in‘sales activities with potential customers in order to operate and maintain the distributorship or franchise successfully.

F. That purchasers of respondents’ distributorships or franchises will be trained in the operation of their distributorship or - franchise by respondents.

G. That respondents’ Life Breather product is an effective device for the prevention of death or injury from asphyxiation due to drowning, heart attack, electrical shock, poisonous gas inhalation or other causes.

Par. 6. In truth and in fact:

A. Relatively few, if any, persons who purchased a distributorship or franchise from respondents earned $15,000 to $20,000 a year in their spare time or full time. © B. Respondents’ claimed earnings projections are far in excess of the earnings of any person or persons who purchased and operated respondents’ distributorships or franchises. C. In the vast majority of mstances, respondents did not secure ~ profitable customers for purchasers of respondents’ distr ibutorships or franchises.

D. Prior business experience is necessary in order for purchasers of respondents’ distributorships or franchises to operate and maintain the distributorship or franchise successfully. E. Purchasers of respondents’ distributorships or franchises are required to sell products and engage in sales activities with potential customers in order to operate and maintain the distributorship or franchise successfully.

F. Respondents did not provide purchasers of their distributorships or franchises with the training necessary for the operation of their distributorship or franchise.

G. Respondents’ Life. Breather product is not an effective device for the prevention of death or injury from asphyxiation due to drowning, heart attack, electrical shock, poisonous gas inhalation and other causes, Said statements and representations were therefore, false, misleading and deceptive.

Par. 7. In the further course and conduct of their business as aforesaid and for the purpose of inducing the purchase of their dis- 314 FEDERAL. TRADE COMMISSION DECISIONS Complaint 81. F.T.C.

tributorships or franchises and. products, respondents, their agents, representatives or employees, or any of them, have made oral statements and representations.

Among and typical of the statements and representations made by respondents, their agents, representatives or employees, or any of them, but not all inclusive thereof are the following: A. That respondents will initially provide a specific number of customers or accounts for each distributor or franchisee and will obtain initial orders for merchandise from said customers or accounts on an open account basis with payment to be remitted directly to the distributor or franchisee.

B. That merchandise and/or sales aids purchased from respondents by respondents’ distributors or franchisees will be delivered to said distributors or franchisees on or before a pazticular date or within a specified time period.

‘C. That respondents will provide its. distributors or franchisees with sales and promotional. literaturesrelating to the products said distributors or franchisees purchase from respondents. D. That respondents will provide instruction manuals and/or guarantee forms with certain products purchased from respondents by. respondents’ distributors or franchisees. kK. That respondents will provide national and local advertising of the products purchased by their distributors or franchisees. Par. 8. In truth and in fact:

A. In a substantial number of instances, respondents did not secure the agreed upon number of customers or accounts for a distributor or franchisee and in a substantial number of instances the customers or accounts respondents did obtain, did not order or receive initial deliveries of merchandise on an open account basis with payment to be remitted directly to the distributor or franchisee but instead accepted the merchandise conditionally on a consignment basis. B. In a substantial number of instances, respondents did not deliver, to distributors or franchisees, the merchandise and/or sales aids purchased from respondents by said distributors or franchisees on or before the date specified or within the time period specified. C. In a substantial number of instances, respondents failed to provide distributors or franchisees with the sales and promotional literature relating to the products purchased from respondents by respondents’ distributors or franchisees.

D. In a substantial number of instances, respondents failed to provide distributors or franchisees with instruction manuals and/or guarantee forms for certain products purchased from respondents by respondents’ distributors or franchisees, - STEVEN LEWIS CO., ET AL. 375 870 ; Complaint E. Very few, if any, local or national advertisements, or advertisements of any kind, were published or disseminated by respondents for products purchased from respondents by respondents’ distributors or franchisees.

_ Said statements and representations were, therefore, false, misleading and deceptive.

Par. 9. In the further course and conduct of their business and in furtherance of their purpose of inducing the purchase of, and payment for distributorships, franchises and products, respondents falsely and deceptively failed to disclose to prospective purchasers of respondents’ distributorships, franchises and products prior to the consummation of any contract between respondents and any such prospective distributor or franchisee certain material facts which would assist such prospects in evaluating the probabilities of their success as distributors or franchisees and which would lessen the potential for deception, including: a detailed explanation of the rights and obligations of the parties under the distributor or franchise agreement; the financial details pertaining to the distributor or franchise agreement including the amount to be paid by the distributor or franchisee for the distributorship or franchise, the amount to be paid for any services to be rendered by respondents and the amount to be paid for any merchandise offered for sale or sold thereunder; as well as significant information relating to the success or failure and business experience of prior purchasers of respondents’ distributorships or franchises. _ Par. 10. The use by respondents of the aforesaid unfair and false and misleading and deceptive statements, representations and practices, and their failure to disclose material facts, as aforesaid, has had the capacity and tendency to mislead members of the public into the erroneous and mistaken belief that said statements and representations were true and complete, and into the purchase of respondents’ distributorships or franchises and products by reason of said erroneous and mistaken belief and unfairly into the assumption of obligations and the payment of monies which they might otherwise not have incurred.

Par. 11. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been in substantial competition, in commerce, with corporations, firms and individuals engaged in the sale of distributorships or franchises and products of the same general kind and nature as those sold by respondents. Par. 12. The aforesaid acts and practices of respondents, as herein alleged, were all to the prejudice and injury of the public and of respondents’ competitors and constituted unfair methods of competition 376° _. FEDERAL .TRADE~ COMMISSION. DECISIONS Decision and Order 81 E.T.C.

in commerce and unfair and deceptive acts.and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act. Decision AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the New York Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commis-’ sion’s rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (380) days, now in further conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent Steven Lewis is an individual formerly trading and doing business as the Steven Lewis Company with its office and principal place of business formerly located at 6565 Sunset Boulevard, Hollywood, California.

Respondent Twenty First Century Industries, Inc., is a corporation organized, existing and formerly doing business under and by virtue of the laws of the State of California, with its office and principal place of business formerly located at 6565 Sunset Boulevard, Hollywood, California.

Respondent Steven Lewis is an officer of the corporate respondent. He formulated, directed and controlled the policies, acts and practices of said corporation. His address is 205 Third Avenue, New York, New York.

370 Decision .and Order 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, a and the proceeding isin the publicinterest.

ORDER It is ordered, That respondents, Steven Lewis, an individual formerly trading and doing business as the Stevens Lewis Company, and Twenty First Century Industries, Inc., a. corporation and its officers, and Steven Lewis, individually and as an officer of said corporation, | their successors and assigns, and respondents’ officers, agents, representatives and employees, directly or through any corporate or other the advertising, offering for sale, sale or r distribution of: men’s cologne, Ronson products, Life Breathers, greeting cards or any other products or of distributorships or franchises in commerce as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from :

1. Directly.or by implication:

A. Representing that distributors or franchisees will earn or can reasonably expect to earn or receive any stated or gross or net amount of earnings or profits; or representing, in any manner, the past earnings of distributors or franchisees unless in fact the past earnings represented are those of a substantial number of distributors or franchisees and accurately reflect the average earnings of said distributors or franchisees under circumstances similar to those of the person to whom the representation is made.

B. Representing that respondents, their agents, representatives or employees will secure profitable customers or accounts for purchasers of respondents’ distributorships or franchises or misrepresenting, in any manner, the amount of time and effort respondents will spend in attempting to obtain such customers or accounts for their distributors or franchisees.

C. Representing that purchasers of respondents’ distributorships or franchises will not be required to sell products or engage in sales activities. with potential customers in order to operate and maintain the distributorship or franchise successfully or misrepresenting, in any manner, the amount and type of work required of distributors or franchisees in order to operate and maintain the distributorship or franchise successfully.

. 494-841—73——25 - pane ne FEDERAL TRADE. COMMISSION DECISIONS Decision ‘dnd: Order ‘ 81 EVELC.

~_D. Representing thatprior business experience is not required of purchasers of ‘respondents’ distributorships. or franchises in order to operate and maintain the distributorship or franchise successfully or misrepresenting, in any _ manner, the prior experience required of distributors or . ' franchisees in order to operate and maintain the distributor-. . ship « or franchise successfully.

°K. Represeriting that purchasers of respondents’ distrib- ‘utorships or franchises will be trained in the operation of “their distributorship or franchise or misrepresenting, in any ““ manner, the quality, : amount or nature of respondents’ contribution5 1 4 1 12 2 1062 1176 43 36 96.911537 to5 1 4 1 12 3 1117 1180 59 42 96.962021 thes 1 4 1 12 4 1191 1174 164 52 96.907349 training5 1 4 1 12 5 1362 1177 41 33 96.440620 of5 1 4 1 12 6 1417 1177 91 33 96.440620 theirs 1 4 1 12 7 1523 1168 223 53 96.837135 distributors5 1 4 1 12 8 1760 1187 39 32 96.968506 or5 1 4 1 12 9 1814 1169 218 50 93.286285 franchisees.4 1 4 1 13 0 927 1214 1166 73 -1 5 1 4 1 13 1 905 1228 33 47 0.000000 '”5 1 4 1 13 2 972 1228 39 35 0.000000 F.5 1 4 1 13 3 1020 1223 260 56 96.752228 Representing5 1 4 1 13 4 1287 1222 82 50 96.524162 that5 1 4 1 13 5 1381 1223 234 55 93.052559 respondents’5 1 4 1 13 6 1627 1218 83 42 96.842705 Life5 1 4 1 13 7 1722 1217 170 52 96.944572 Breather5 1 4 1 13 8 1901 1214 130 73 90.614883 products 1 4 1 13 9 2055 1225 12 33 71.080368 i5 1 4 1 13 10 2057 1235 36 24 84.708015 is:4 1 4 1 14 0 902 1266 1187 56 -1 5 1 4 1 14 1 902 1277 74 37 36.137833 an effective device for the prevention of death or injury from asphyxiation or otherwise misrepresenting, in any manner, ‘the nature, character, performance or efficacy of any product. 2. Representing that respondents will secure cash sale or open account sale customers or accounts, for each distributor or fran- . _chisee, or will obtain orders for merchandise for each distributor _ or ‘franchisee from customers or accounts with payment to be re- 5 1 5 1 3 2 848 1631 125 37 93.990425 mitted5 1 5 1 3 3 985 1635 144 42 96.020851 directly5 1 5 1 3 4 1141 1638 37 29 96.925949 to5 1 5 1 3 5 1189 1635 59 32 96.925949 thes 1 5 1 3 6 1259 1634 206 33 96.849426 distributors 1 5 1 3 7 1476 1645 39 21 96.410263 or5 1 5 1 3 8 1526 1633 194 32 96.410263 franchisees 1 5 1 3 9 1732 1644 38 21 97.003059 or5 1 5 1 3 10 1780 1631 314 41 96.367805 misrepresenting,2 1 6 0 0 0 850 1683 1255 1113 -1 3 1 6 1 0 0 850 1683 1243 147 -1 4 1 6 1 1 0 850 1683 1242 45 -1 5 1 6 1 1 1 850 1687 38 32 96.849792 in5 1 6 1 1 2 906 1698 68 30 96.715080 any5 1 6 1 1 3 991 1697 154 31 96.133400 manner,5 1 6 1 1 4 1162 1686 59 31 96.902473 thes 1 6 1 1 5 1238 1685 143 32 96.680641 numbers 1 6 1 1 6 1398 1695 39 21 96.569862 or5 1 6 1 1 7 1454 1687 83 38 96.768333 types 1 6 1 1 8 1554 1683 40 33 96.900558 of5 1 6 1 1 9 1609 1686 185 30 96.401093 customers5 1 6 1 1 10 1811 1695 41 20 96.401093 or5 1 6 1 1 11 1867 1686 158 29 93.290779 accounts5 1 6 1 1 12 2042 1692 50 21 92.459213 re-4 1 6 1 2 0 851 1733 1242 49 -1 5 1 6 1 2 1 851 1737 187 42 90.934288 spondents5 1 6 1 2 2 1054 1737 72 45 93.473808 will5 1 6 1 2 3 1142 1746 114 22 96.664101 secures 1 6 1 2 4 1273 1746 39 21 96.931633 or5 1 6 1 2 5 1327 1736 58 31 96.642952 thes 1 6 1 2 6 1400 1735 125 42 96.918579 selling5 1 6 1 2 7 1539 1734 145 33 96.999817 services5 1 6 1 2 8 1699 1745 39 21 96.964676 or5 1 6 1 2 9 1753 1733 182 33 95.621078 assistance5 1 6 1 2 10 1950 1733 78 31 93.253464 that5 1 6 1 2 11 2044 1743 49 21 93.242226 re-4 1 6 1 3 0 850 1784 1054 46 -1 5 1 6 1 3 1 850 1788 188 42 92.867676 spondents5 1 6 1 3 2 1051 1788 72 31 96.678391 will5 1 6 1 3 3 1138 1786 144 42 96.493988 provides 1 6 1 3 4 1295 1785 91 33 96.493988 theirs 1 6 1 3 5 1399 1785 221 33 96.668350 distributors5 1 6 1 3 6 1633 1796 40 21 96.710709 or5 1 6 1 3 7 1686 1784 218 33 96.064880 franchisees.3 1 6 2 0 0 852 1833 1246 352 -1 4 1 6 2 1 0 893 1833 1200 47 -1 5 1 6 2 1 1 893 1841 29 30 95.571213 3.5 1 6 2 1 2 941 1839 252 41 96.121201 Representing5 1 6 2 1 3 1208 1837 78 32 96.317078 that5 1 6 2 1 4 1303 1848 67 31 96.777969 any5 1 6 2 1 5 1386 1836 148 42 96.514412 products 1 6 2 1 6 1549 1847 40 21 96.554207 or5 1 6 2 1 7 1604 1835 165 42 96.623184 products5 1 6 2 1 8 1783 1845 40 22 95.874084 or5 1 6 2 1 9 1839 1834 86 33 96.731583 sales5 1 6 2 1 10 1940 1835 86 40 93.287109 aids,5 1 6 2 1 11 2041 1833 52 33 92.839676 of-4 1 6 2 2 0 853 1885 1244 45 -1 5 1 6 2 2 1 853 1890 98 32 96.006393 fered5 1 6 2 2 2 977 1890 57 32 96.874794 for5 1 6 2 2 3 1060 1889 70 32 95.762138 sales 1 6 2 2 4 1155 1899 38 22 96.604805 or5 1 6 2 2 5 1219 1888 76 33 95.475746 sold5 1 6 2 2 6 1318 1888 46 42 95.475746 by5 1 6 2 2 7 1390 1887 223 42 96.069305 respondents5 1 6 2 2 8 1636 1890 39 29 96.970764 to5 1 6 2 2 9 1697 1886 91 33 96.444801 theirs 1 6 2 2 10 1813 1885 220 33 96.569893 distributors5 1 6 2 2 11 2056 1895 41 21 96.553780 or4 1 6 2 3 0 852 1935 1244 46 -1 5 1 6 2 3 1 852 1941 221 40 96.736893 franchisees,5 1 6 2 3 2 1093 1939 72 33 96.697205 will5 1 6 2 3 3 1184 1939 42 32 96.939972 be5 1 6 2 3 4 1246 1938 172 33 96.100555 delivered5 1 6 2 3 5 1438 1941 35 29 96.677811 to5 1 6 2 3 6 1493 1938 75 32 96.370003 said5 1 6 2 3 7 1588 1938 222 32 96.370003 distributors5 1 6 2 3 8 1829 1947 40 22 96.787361 or5 1 6 2 3 9 1888 1935 208 33 96.202293 franchisees4 1 6 2 4 0 853 1986 1244 45 -1 5 1 6 2 4 1 853 2002 45 21 96.955841 on5 1 6 2 4 2 916 2002 39 21 96.581779 or5 1 6 2 4 3 970 1990 120 33 96.365906 before5 1 6 2 4 4 1107 2001 20 21 96.415779 a5 1 6 2 4 5 1145 1989 191 42 96.296532 particulars 1 6 2 4 6 1353 1989 89 41 96.058807 date,5 1 6 2 4 7 1459 2000 39 21 96.982887 or5 1 6 2 4 8 1514 1989 123 31 96.861420 within5 1 6 2 4 9 1654 2000 20 21 96.528564 a5 1 6 2 4 10 1692 1987 159 43 97.001282 specified5 1 6 2 4 11 1868 1986 81 33 95.864967 times 1 6 2 4 12 1966 1986 131 42 96.440010 period,4 1 6 2 5 0 853 2037 1245 47 -1 5 1 6 2 5 1 853 2042 113 33 96.619286 unless5 1 6 2 5 2 986 2041 223 43 96.545158 respondents5 1 6 2 5 3 1228 2040 87 32 96.875053 have5 1 6 2 5 4 1333 2039 179 42 96.732124 available,5 1 6 2 5 5 1530 2051 40 21 96.765778 or5 1 6 2 5 6 1588 2039 37 32 96.865242 in5 1 6 2 5 7 1642 2040 106 40 96.865242 stock,5 1 6 2 5 8 1767 2039 47 32 96.475166 all5 1 6 2 5 9 1833 2038 83 33 96.475166 such5 1 6 2 5 10 1933 2037 165 43 96.858139 products4 1 6 2 6 0 854 2088 1242 45 -1 5 1 6 2 6 1 854 2104 40 21 96.068573 or5 1 6 2 6 2 910 2093 87 32 96.068573 sales5 1 6 2 6 3 1014 2091 75 33 96.637932 aids5 1 6 2 6 4 1105 2092 37 32 96.858711 in5 1 6 2 6 5 1159 2091 187 42 96.687439 quantities5 1 6 2 6 6 1361 2091 164 32 96.547668 sufficient5 1 6 2 6 7 1541 2094 36 28 96.533554 to5 1 6 2 6 8 1593 2093 88 29 96.726303 meets 1 6 2 6 9 1696 2090 48 32 96.051529 all5 1 6 2 6 10 1759 2088 202 43 93.291100 reasonably5 1 6 2 6 11 1978 2088 118 32 93.029839 antici-4 1 6 2 7 0 855 2142 247 43 -1 5 1 6 2 7 1 855 2143 105 42 94.738068 pated5 1 6 2 7 2 974 2142 128 36 94.738068 orders.3 1 6 3 0 0 855 2189 1250 607 -1 4 1 6 3 1 0 897 2189 1203 47 -1 5 1 6 3 1 1 897 2196 29 31 95.920914 4,5 1 6 3 1 2 942 2193 251 43 96.712837 Representing5 1 6 3 1 3 1206 2193 79 32 96.523293 that5 1 6 3 1 4 1297 2192 223 43 96.731499 respondents5 1 6 3 1 5 1533 2191 73 33 96.112419 will5 1 6 3 1 6 1618 2190 145 43 96.627686 provides 1 6 3 1 7 1775 2190 92 33 96.836166 theirs 1 6 3 1 8 1879 2189 221 32 96.647202 distributors4 1 6 3 2 0 855 2241 1243 43 -1 5 1 6 3 2 1 855 2256 40 21 96.362083 or5 1 6 3 2 2 919 2244 210 33 96.362083 franchisees5 1 6 3 2 3 1153 2243 85 33 96.677917 with5 1 6 3 2 4 1262 2243 87 32 96.918877 sales5 1 6 3 2 5 1372 2243 189 41 96.353027 literature,5 1 6 3 2 6 1584 2242 230 42 96.268257 promotional5 1 6 3 2 7 1837 2241 189 42 83.175507 literature,5 1 6 3 2 8 2048 2241 50 31 93.209709 in-4 1 6 3 3 0 856 2292 1245 44 -1 5 1 6 3 3 1 856 2295 170 34 95.798042 structions 1 6 3 3 2 1037 2295 167 40 96.761894 manuals,5 1 6 3 3 3 1217 2297 187 39 96.900772 guarantees 1 6 3 3 4 1417 2293 109 33 94.862999 forms5 1 6 3 3 5 1538 2304 41 22 94.862999 or5 1 6 3 3 6 1590 2304 68 32 96.446045 any5 1 6 3 3 7 1671 2292 98 34 96.491600 others 1 6 3 3 8 1780 2292 158 33 96.690414 materials 1 6 3 3 9 1951 2292 150 41 96.808640 relating4 1 6 3 4 0 856 2343 1242 46 -1 5 1 6 3 4 1 856 2350 37 29 96.180000 to5 1 6 3 4 2 914 2346 164 43 96.180000 products5 1 6 3 4 3 1097 2346 129 32 96.767647 offered5 1 6 3 4 4 1246 2346 58 31 96.536896 for5 1 6 3 4 5 1322 2345 69 32 96.574020 sales 1 6 3 4 6 1411 2355 40 22 96.840500 or5 1 6 3 4 7 1469 2345 75 32 96.907135 sold5 1 6 3 4 8 1562 2345 46 41 96.953072 by5 1 6 3 4 9 1627 2343 223 43 96.473785 respondents5 1 6 3 4 10 1868 2346 36 29 96.636292 to5 1 6 3 4 11 1924 2343 90 33 93.248848 theirs 1 6 3 4 12 2033 2343 65 32 92.968941 dis-4 1 6 3 5 0 856 2394 1247 43 -1 5 1 6 3 5 1 856 2397 169 33 91.222740 tributors5 1 6 3 5 2 1047 2407 39 21 96.846840 or5 1 6 3 5 3 1109 2395 210 33 96.771576 franchisees5 1 6 3 5 4 1341 2396 113 32 96.177490 unless5 1 6 3 5 5 1476 2395 224 42 95.996078 respondents5 1 6 3 5 6 1720 2394 86 33 95.996078 have5 1 6 3 5 7 1827 2405 46 22 95.718513 on5 1 6 3 5 8 1891 2394 96 33 95.799759 hands 1 6 3 5 9 2007 2406 37 22 96.049644 or5 1 6 3 5 10 2063 2394 40 32 96.736816 in4 1 6 3 6 0 859 2446 1243 42 -1 5 1 6 3 6 1 859 2448 96 33 96.441078 stocks 1 6 3 6 2 969 2448 47 32 96.611107 all5 1 6 3 6 3 1031 2448 83 31 96.218658 such5 1 6 3 6 4 1128 2447 188 41 96.376534 literature,5 1 6 3 6 5 1331 2447 166 41 95.863487 manuals,5 1 6 3 6 6 1511 2447 111 32 95.957314 forms5 1 6 3 6 7 1635 2457 39 22 96.335777 or5 1 6 3 6 8 1687 2446 82 32 96.335777 such5 1 6 3 6 9 1783 2446 99 33 96.448074 others 1 6 3 6 10 1894 2446 157 33 73.717026 materials 1 6 3 6 11 2064 2446 38 32 96.491493 in4 1 6 3 7 0 858 2496 1245 45 -1 5 1 6 3 7 1 858 2499 187 42 96.663780 quantities5 1 6 3 7 2 1066 2498 166 32 95.286240 sufficient5 1 6 3 7 3 1252 2501 37 29 96.286667 to5 1 6 3 7 4 1311 2501 89 29 96.780045 meets 1 6 3 7 5 1421 2498 58 31 96.387665 thes 1 6 3 7 6 1501 2497 198 33 96.909958 reasonable5 1 6 3 7 7 1720 2496 244 42 96.364578 requirements5 1 6 3 7 8 1986 2497 39 33 96.364578 of5 1 6 3 7 9 2045 2497 58 32 96.275711 thea 1 6 3 8 0 860 2547 1243 43 -1 5 1 6 3 8 1 860 2550 222 32 96.630066 distributors5 1 6 3 8 2 1095 2560 39 21 96.931458 or5 1 6 3 8 3 1147 2548 209 33 96.089966 franchisees5 1 6 3 8 4 1369 2552 35 29 96.825348 to5 1 6 3 8 5 1418 2548 112 33 96.630676 whom5 1 6 3 8 6 1541 2549 84 32 96.630676 such5 1 6 3 8 7 1636 2547 288 43 96.370148 representations5 1 6 3 8 8 1935 2560 59 21 95.887245 ares 1 6 3 8 9 2005 2548 98 32 96.783546 made4 1 6 3 9 0 860 2599 1242 42 -1 5 1 6 3 9 1 860 2612 40 21 96.440193 or5 1 6 3 9 2 916 2599 313 42 96.174278 misrepresenting,5 1 6 3 9 3 1244 2599 37 33 96.262672 in5 1 6 3 9 4 1297 2610 67 31 96.171204 any5 1 6 3 9 5 1379 2610 152 31 96.339928 manner,5 1 6 3 9 6 1546 2599 58 33 96.838333 thes 1 6 3 9 7 1619 2602 141 29 96.274513 amounts 1 6 3 9 8 1773 2599 70 33 96.274513 ands 1 6 3 9 9 1857 2602 81 39 96.504456 types 1 6 3 9 10 1953 2599 41 32 93.278259 of5 1 6 3 9 11 2006 2599 96 33 92.927361 addi-4 1 6 3 10 0 859 2649 1245 43 -1 5 1 6 3 10 1 859 2651 109 32 95.000267 tional5 1 6 3 10 2 994 2650 175 33 96.280922 materials5 1 6 3 10 3 1195 2650 224 42 96.424538 respondents5 1 6 3 10 4 1442 2650 72 33 96.793152 will5 1 6 3 10 5 1540 2650 144 42 96.384926 provides 1 6 3 10 6 1706 2649 91 33 96.396973 theirs 1 6 3 10 7 1821 2649 221 34 96.140495 distributors5 1 6 3 10 8 2065 2660 39 21 96.786911 or4 1 6 3 11 0 861 2700 1244 43 -1 5 1 6 3 11 1 861 2701 209 33 96.529594 franchisees5 1 6 3 11 2 1093 2702 104 41 96.491112 along5 1 6 3 11 3 1217 2701 87 33 96.160561 with5 1 6 3 11 4 1324 2701 59 33 96.498627 thes 1 6 3 11 5 1404 2702 164 40 96.669334 products5 1 6 3 11 6 1588 2700 130 33 95.936974 offered5 1 6 3 11 7 1738 2700 58 33 96.765747 for5 1 6 3 11 8 1815 2701 71 33 96.492897 sales 1 6 3 11 9 1906 2713 38 21 96.965157 or5 1 6 3 11 10 1965 2703 75 32 96.403152 sold5 1 6 3 11 11 2059 2702 46 41 96.403152 by4 1 6 3 12 0 862 2752 921 44 -1 5 1 6 3 12 1 862 2753 224 43 96.168823 respondents5 1 6 3 12 2 1103 2756 37 29 96.319824 to5 1 6 3 12 3 1158 2753 91 32 96.319824 theirs 1 6 3 12 4 1268 2752 222 33 96.798477 distributors5 1 6 3 12 5 1507 2763 40 21 96.655807 or5 1 6 3 12 6 1564 2752 219 32 96.329247 franchisees. . (STEVEN LEWIS CO., ET AL. © 379 Decision and Order 5. Representing that respondents will provide national and local advertising of the products offered for sale or sold by respondents to their distributors or franchisees or misrepresenting, in any manner, the extent, type and method of promotion and services provided by: respondents in connection with the advertising of products offered for sale or sold by respondents to their distributors or franchisees or misrepresenting, in any manner, the media in which said advertising has appeared or will appear. 6. Failing to furnish any prospective distributor of franchisee, in a separate written statement in a clear and concise manner, prior to the consummation of any contract between respondents and any such prospective distributor or franchisee: 7 A. A‘ detailed statement setting forth all the rights and obligations of the parties under the distributor or franchise agreement. - - .

B. Complete financial details pertaining to the distributor or franchise agreement including the amount to be paid by the distributor or franchisee for the distributorship or franchise, the amount to be paid for any services to be rendered by respondents and the amount to be paid for any merchandise offered for sale or sold thereunder. ° C. A list of the names and addresses of all persons who, in the two calendar years immediately preceding, purchased a distributorship or franchise, for products or product lines similar to, or the same as, those being offered by respondents to any prospective distributor or franchisee, and the gross dollar volume of purchases of such products from respondents, by each such distributor or franchisee, in each of said calendar years, exclusive of the dollar amount of merchandise purchased and paid for at the time of the purchase of the distributorship or franchise.

7. Failing to disclose, in each contract for the sale of a distributorship or franchise, to those prospective distributors or franchisees whose accounts will be obtained on a consignment basis, that said accounts will not be cash sale or open account sale customers or accounts, but will be consignment accounts and that. merchandise so placed or delivered may be returned to the distributor or franchisee.

Tt is further ordered, That respondents:

1. Inform all prospective purchasers of distributorships, franchises or merchandise, orally and provide in writing in all contracts that, (1) the contract may be cancelled for any reason by 380 FEDERAL. TRADE. COMMISSION DECISIONS Decision and Order 81 ETC.

mailing a notice of cancellation to respondents’ business address prior to midnight of the fifth day following the date upon which the purchaser signed the distributor or franchise agreement. 2. Promptly. refund all monies to distributors, franchisees or customers who have requested contract cancellation in accordance with the provisions of Paragraph One above. It. is further ordered, That respondents. maintain files containing all inquiries or complaints from any source relating to acts or practices prohibited by this order, for a period of two years after their receipt, and that such files be made available for examination by a duly authorized agent of the Federal Trade Commission during the regular hours of the respondents’ business for inspection and copying. . It is further ordered, That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate “respondent such as dissolution, assignment or sale resulting in the emergence of successor corporations, the creation or dissolution of subsidiaries or corporate affiliates or any other change in the corporation which may affect compliance obligations arising out of this order. It is further ordered, That respondents deliver a copy of this order to cease and desist to all present and future employees, agents and representatives engaged in the offering for sale or sale of respondents’ distributorships, franchises or products or in any aspect of preparation, creation or placing of advertising and that respondents secure a signed statement acknowledging receipt of said order from each such person. It is further ordered, That the individual respondent named herein promptly notify the Commission of the discontinuance of his present business or employment and of his affiliation with a new business or employment. Such notice shall include respondent’s current business address and a statement as to the nature of the business or employment in which he is engaged as well as a description of his duties and responsibilities.

It is further ordered, That the corporate respondent distribute a copy of this order to each of its operating divisions or departments. It is further ordered, That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order. CREDIT BUREAU OF LORAIN, INC., ET AL. - 381 Complaint In There Masttiitt OF